Highlights

  • Harbour Energy acquires LLOG, entering the deepwater US Gulf of America market.
  • Acquisition adds oil-weighted assets with operational control, increasing production and reserves.
  • Transaction expected to be free cash flow per share accretive from 2027.

Harbour Energy plc (LSE:HBR) has entered into an agreement to acquire LLOG Exploration Company LLC from LLOG Holdings LLC for USD 3.2 billion, comprising USD 2.7 billion in cash and USD 0.5 billion in Harbour voting ordinary shares. The acquisition marks Harbour’s strategic entry into the US Gulf of America, expanding its global portfolio alongside existing operations in Norway, the UK, Argentina, and Mexico.

Asset Profile and Operational Control
The acquisition adds high-quality, conventional offshore oil assets with significant operational control. LLOG’s portfolio includes the Who Dat asset in Mississippi Canyon, as well as Buckskin and Leon-Castile in Keathley Canyon. The assets are low breakeven, producing approximately 34 kboepd at operating costs of USD 12/boe, with a blended federal and state tax rate of roughly 23%. Production is expected to nearly double by 2028, supported by a leading position in the Lower Tertiary Wilcox play.

Reserves, Production, and Portfolio Impact
The deal adds 2P reserves of 271 mmboe, increasing Harbour’s 2P reserves by 22% and extending its 2P reserves life from seven to eight years. Overall production is projected to reach around 500 kboepd by the end of the decade. The acquisition increases Harbour’s oil weighting, OECD presence, and operational control, while enhancing margins and reducing the effective tax rate.

Growth Opportunities and Lease Inventory
LLOG operates over 80 leases, primarily in Mississippi Canyon and Keathley Canyon, providing a deep inventory of infrastructure-led, high-return drilling opportunities. The company expects to drill up to eight wells across 2026 and 2027, while also participating in the recent Gulf of America federal lease sale, aiming to secure 11 deepwater leases.

Financial Impact and Shareholder Returns
The acquisition is expected to be free cash flow per share accretive from 2027. Harbour intends to adopt a payout ratio-based distribution policy in 2026, combining a base dividend with share buybacks. The material and increasing free cash flow will support competitive shareholder distributions while maintaining an investment-grade balance sheet.

Consideration Structure and Closing
The total consideration includes USD 2.7 billion in cash, funded via a USD 1 billion bridge facility, a USD 1 billion term loan, and existing liquidity, along with USD 0.5 billion in new Harbour shares. Post-completion, LLOG Holdings LLC will hold 11% of Harbour’s voting ordinary shares, with 70% of these shares subject to a one-year lock-up. The acquisition is subject to customary closing conditions and regulatory approvals, with completion expected in late Q1 2026.

Share Price Snapshot
HBR was trading at GBX 206.00 per share as of 22 December 2025.